SpiceJet gets 4 weeks to deposit ₹145cr in arbitration dispute
What's the story
The Delhi High Court has given low-cost carrier SpiceJet four weeks to deposit ₹144.5 crore in its arbitration dispute with Kalanithi Maran and KAL Airways Pvt Ltd. The order comes after several rounds of litigation, during which the courts rejected requests for cash payment deferrals due to liquidity concerns. Justice Subramonium Prasad dismissed SpiceJet's request to modify an earlier order from January this year.
Court ruling
SpiceJet sought to furnish property instead of cash deposit
In its plea seeking modification of the earlier order, SpiceJet had suggested providing an immovable property worth about ₹148 crore as security, instead of making the cash deposit. However, Justice Prasad rejected this plea outright, saying he would have dismissed it without hearing but listened to it for larger stakeholder considerations. The judge said, "Dismissed. I am extending the time by four more weeks to deposit the money."
Financial strain
Airline argues immediate payment would disrupt operations
Senior counsel Amit Sibal, representing the airline, told the court that immediate payment would disrupt operations. He said, "Can I just point out that my operations will be affected? There are 22,000 passengers and 7,000 employees." The airline also claimed it is facing a liquidity crunch due to flight cancellations on Gulf routes.
Dispute details
Dispute dates back to 2015
The dispute dates back to January 2015, when Maran and KAL Airways sold their 58.46% share in SpiceJet to Ajay Singh amid financial troubles. As part of the deal, they invested around ₹679 crore into the airline for convertible warrants and preference shares. Later, Maran alleged these instruments were not issued under new management and sought a refund. The matter was referred to arbitration before a three-member tribunal comprising retired Supreme Court judges.